"All capital is wealth but all wealth is not capital". Explain why all wealth is not capital.

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Solution

Wealth is any product of nature which, through human labor, is converted into something that is useful to humans in some way.
Capital is specifically that wealth which is set aside for the purpose of producing more wealth.
For example a horse is not wealth. If you take a wild horse and tame it and train it, then it becomes a wealth. If you use the horse to pull a plow to increase your agricultural productivity, then the horse becomes capital.

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